The Central Electricity Regulatory Commission (CERC) has approved a tariff of ₹2.45 (~$0.026)/kWh for SJVN Green Energy’s 1,000 MW solar projects in Bikaner, Rajasthan.

SJVN Green had secured this capacity at IREDA’s auction for setting up 5,000 MW of grid-connected solar projects.

It approached the Commission to approve an increased tariff of ₹2.57 (~$0.027)/kWh due to rising GST rates for renewable energy devices. However, CERC held that tariffs existing during the bidding process could not be altered due to a change in GST rates.

Background

In January 2021, IREDA issued a request for selection to set up 5,000 MW grid-connected solar projects under the Central Public Sector Undertaking Scheme (Tranche-III). The ceiling tariff for the projects was set at ₹3.5 (~$0.037)/kWh, with viability gap funding (VGF) support of ₹7 million (~$74,634.42)/MW.

In May 2021, IREDA revised the ceiling tariff to ₹2.45 (~$0.026)/kWh and the maximum VGF support to ₹5.5 million (~$58,558.5)/MW.

The e-reverse auction for the tender was held in September 2021, with SJVN securing 1,000 MW of capacity as the L1 bidder.

It received a letter of award, capping the tariff at ₹2.45 (~$0.026)/kWh and the VGF support at ₹4.47 million (~$47,613.38)/MW.

After securing the capacity, SJVN’s subsidiary, SJVN Green Energy (SGEL), began developing the solar project in Bikaner.

In September 2022, the Ministry of New and Renewable Energy informed IREDA of an increase in the GST rate to 12% from 5% on certain renewable energy devices and their parts. IREDA then informed the parties concerned that the tariff cap had risen to ₹2.57 (~$0.027)/kWh because of the GST increase.

In the first three months of 2024, SGEL signed power usage agreements with Uttarakhand Power Corporation, Jammu & Kashmir Power Corporation, and Rajasthan Urja Vikas and IT Services, for capacities of 200 MW, 300 MW, and 500 MW, respectively. These agreements were signed for a tariff of ₹2.57 (~$0.027)/kWh.

The scheduled commissioning date for SGEL’s 1,000 MW solar capacity was delayed from September 2024 to September 2025 due to supply chain disruptions.

SJVN and SGEL approached the Commission to approve the tariff of ₹2.57 (~$0.027)/kWh for the solar projects and a VGF support of ₹4.47 million (~$47,613.38)/MW. They informed the Commission that the tariff ceiling had been increased due to a rise in the GST rate.

The petitioners submitted that 1,000 MW capacity was awarded after a competitive bidding process. SJVN and SGEL added that the power usage agreements had already been signed at tariffs of ₹2.57 (~$0.027)/kWh.

Commission’s Analysis

The Commission noted that the petitioners won the capacity after a competitive and transparent bidding process.

CERC acknowledged the increase in GST rates for renewable energy devices and equipment.

However, referring to its earlier orders, the Commission held that the tariffs discovered through bidding could not be automatically altered after the increase in GST rates. Keeping the approved tariffs at ₹2.45 (~$0.026)/kWh, it stated that bid parameters in effect on the date of bidding must remain the reference point; otherwise, the bidding process would be distorted.

CERC observed that the GST increase could be considered a change-in-law event and allowed the petitioners to file a separate claim petition on the same within six weeks.

The Commission allowed the petitioners to recover the GST costs from the power procurers, subject to the amount approved by it.

Recently, CERC adopted a tariff of ₹2.45 (~$0.0260)/kWh for 1,200 MW solar power projects being developed by the Solar Energy Corporation of India.

Subscribe to Mercom’s real-time Regulatory Updates to ensure you don’t miss any critical updates from the renewable industry.